Daily Deduction

Questions, Questions...

How might the AHCA change to gain GOP support? The House Budget Committee plans to mark up the American Health Care Act today. Vice President Pence seems to have secured Republican Study Committee support of the bill in exchange for two changes: It wants to freeze Medicaid enrollment starting in 2018 instead of 2020 and wants to require enrollees to meet work requirements. Unlike the House Freedom Caucus, the RSC is okay with refundable tax credits to help pay for health insurance premiums. Many governors, including some Republicans, will not be happy with the 2018 date.

How much revenue would a border-adjustable tax really raise? A new paper forthcoming in TaxNotes from David Kamin of the New York University School of Law and Brad Setser of the Council on Foreign Relations suggests that House GOP’s revenue projections may be overstated. The New York Times editorial board concurs.

How have capital gains affected average income tax rates? TPC’s Jim Nunns shows how preferential rates, ownership patterns, volatility, and taxation upon realization of gains have affected average income tax rates over time and across the income distribution.

How will tax expenditures grow over the next several years? The Joint Committee on Taxation released its estimate of tax expenditures from 2016 through 2020. The Committee for a Responsible Federal Budget takes a look and notes that the preferences will cost nearly $1.6 trillion this year. That’s the highest amount in history, and represents over 70 percent of corporate and individual income tax revenue, thanks in large part to the 2015 tax extenders bill.

In case you need an AMT primer (or reminder). In 2005, President Trump paid $36.5 million in federal income tax according to his now-public 2005 Form 1040. But $31 million of that was in the form of the Alternative Minimum Tax. Without the AMT, Trump would have paid an effective federal income tax rate of just 3.5 percent. TPC’s Howard Gleckman notes that Trump’s AMT experience is an example of why the tax is necessary, but also why it is a crude safety net under a deeply flawed tax code.

The UK government ditched its plan to hike its tax on the self-employed. Conservatives said the plan—announced just last week—would penalize entrepreneurs and violates finance minister Philip Hammond’s pledge not to raise national insurance premiums. Hammond withdrew the plan yesterday, in an effort to protect Prime Minister Theresa May’s current majority in Parliament.

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